Yorkshire & Clydesdale Bank Pension Scheme, Glasgow, Scotland, insured £1.6 billion ($2 billion) in liabilities through a longevity hedge with Pacific Life Re International and Zurich Assurance.
The longevity hedge is an insurance policy between the pension fund and Zurich Assurance, and a reinsurance arrangement between Pacific Life Re and Zurich Assurance.
Under this arrangement Pacific Life Re assumes 100% of the longevity risk associated with the liabilities of 9,000 plan participants.
"The trustee is delighted to have completed this longevity swap, which will provide significant protection for our members against the costs associated with future increases in life expectancy," said Inder Dhingra, trustee chairman of the pension fund, in a news release.
Sadie Scaife, lead adviser to the trustee and consulting actuary at Willis Towers Watson, added in the release: "The transaction was negotiated and implemented over a period of significant volatility in the market and goes to show that longevity swaps continue to be an effective risk management option for pension schemes."
"There is strong appetite in the reinsurance market for longevity risk, and we're pleased to have helped the trustee to take advantage of the current market opportunity," Ms. Scaife added.
